The US economy needs supply-side interventions …
OK. So what interventions? Get a little more specific, Mr. Stiglitz.
From my vantage point in the cheap seats, the problems seem to be external shocks. We have a war in Ukraine that is threatening some food supplies. Maybe.
Ukraine exports about $27 billion of agricultural products.
Global value added by agriculture, forestry, and fishing is about $3.5 trillion
Yes, we’ve got some mismatches here. The years are for 2021 and 2019, respectively. And the world total includes forestry and fishing. But even if we cut the world total in half to account for these additional items, we’re still looking at $1.7 trillion of world production compared to $27 billion Ukrainian exports. That’s still less than 2% of world food.
Yes, yes, there’s logistics of getting food where it needs to be if it’s not coming from Ukraine. And I’m also assuming that we lose ALL Ukrainian production, which is likely an overstatement of the problem.
Then there’s this bit: The world produces about 4 billion metric tons of food each year. But 1.3 billion of that goes to waste. That’s more than 30%.
We could make up the Ukrainian shortfall just by using existing food stocks more wisely and cutting down on waste. Eliminate 1/10th of the waste and we add 3% to usable supplies. I calculated Ukraine’s contribution at 2% of world food.
So perhaps a bit of supply side intervention might help here. Would help with refrigeration and storage be useful? Maybe incentives to put ugly produce into the supply chain instead of throwing it away? https://www.forbes.com/sites/briankateman/2020/03/02/the-tim…
But what other external shocks are there? Perhaps some disease or something? (cough, cough, COVID, cough). (Peter, get that cough checked out, you might have COVID!)
We’ve got shortages of various products coming out of China because of their zero tolerance for COVID transmission. Get a few cases, shut down whole cities. That has a bit of an impact on supplies. How would supply side interventions help with that?
Production could move elsewhere, but that requires factories and workers and equipment in new places. Those take time to build, acquire, and train. Maybe a year to open a factory? Maybe 3? Certainly not something that can be fixed in a quarter or two.
But maybe someone smarter than me knows how to help with this problem.
And I’m sure there are more potential supply side interventions. But what are they? Again, I’m in the cheap seats, not on the field, so don’t ask me. But someone needs to ask the question.